Arab Today, arab today greece default an unscripted tragedy that may end with euro ending
Last Updated : GMT 16:39:21
Arab Today, arab today
Arab Today, arab today

Greece default, an unscripted tragedy that may end with euro ending

Arab Today, arab today

Arab Today, arab today Greece default, an unscripted tragedy that may end with euro ending

Protester waves an EU and a Greek flag
Paris - AFP

If Greece ends up defaulting on its debt it will look nothing like a court-supervised bankruptcy procedure for a company.

Instead it will likely be an improvised and chaotic process that could end with a messy exit of the euro and even the European Union.

Q: Bankrupt or default?

A: A country can't go bankrupt in the same legal sense as a company, where a court makes the official determination that a firm has stopped making payments and then decides on measures to try to repay creditors.

States can fail to make payments, however. Greece could end up defaulting -- failing to pay interest or principal on its debts.

Ratings agencies like Standard & Poor's do declare countries in default. However, they are more concerned with private creditors, and have indicated they may not automatically declare Greece in default if it fails to make a payment to an official creditor.

Q: When does Greece risk defaulting on its debt?

A: The danger date is June 30. On that date Greece should repay around 1.6 billion euros to the IMF, and there is little chance that it will be able to do so unless it has reached a deal to unlock the disbursement of the final 7.2 billion euros ($8.2 billion) in loans under its bailout programme.

Greece has since 2010 been unable to do what other countries do with their debt: roll it over by borrowing new money on the market to repay bonds coming due. With investors no longer willing to lend to Athens at affordable rates, it was forced to seek an international bailout.

Disagreement between the new radical left government that took power in Greece in January and the EU and IMF has held up disbursement of the final bailout funds.

The Greek state has been using various schemes to pay state workers and suppliers to free up enough cash to repay its international debt, but these measures are practically exhausted.

Eurozone finance ministers are unlikely to approve the disbursement of the funds at their Thursday meeting in Luxembourg.

Time to find a solution is rapidly disappearing as a deal must be approved in several national parliaments, including Germany's.

After the IMF payment on June 30, Greece has another one to the IMF in mid-July worth around 450 million euros.

Grece owes 6.7 billion euros to the European Central Bank in July and August, and must repay 2.0 billion euros in short-term treasury bills coming due.

Q: What happens if Greece does default?

A: The main risk is a run on banks by Greeks and investors eager to get their cash out that triggers a collapse of the banking system.

The Greek government would have an incentive to introduce capital controls. The European Central Bank, which has been keeping Greek banks on life support, would have no choice but to pull the plug if it doesn't get its payment due on July 20.

Q: Default = Grexit?

A. While Greece wouldn't be the first nation to default, it would be the first for a eurozone member. If the country did default and found itself unable to borrow euros, the Greek government would have a large incentive to reintroduce the drachma, which it could simply print, to pay salaries and pensions.

Even the Greek Central Bank warned this week that failure to reach a deal "would lead initially to a Greek default and ultimately to the country's exit from the euro area and -– most likely -– from the European Union."

There are no treaty provisions for leaving the euro as European leaders didn't want uncertainty hanging over the single currency, while a nation can vote to leave the EU bloc.

But a de facto exit from the euro by Greece would set a possibly dangerous precedent.

There is a risk of market "contagion" as investors not wanting to get burned might sell off debt and stocks of other eurozone countries seen as being vulnerable.

The EU has in the past three years erected more "firewalls" to dampen market pressure and the ECB is already engaged in a massive purchase of government bonds.

Q: Could a default still be avoided?

A: Yes, if Greece and negotiators from the EU and IMF reach agreement on which reforms need to take place and the 7.2 billion euros in bailout loans are quickly disbursed.

But in the longer term the eurozone can't avoid a discussion of debt relief for Greece, which has shot up to over 170 percent of GDP as the bailouts have been in the form of loans.

The 2012 writedown of Greece's debt concerned private creditors, but its debt levels have rebounded and most of its debt is held by other countries and international institutions.

Q: Could Greece's debt be written off?

A. The IMF has been encouraging a partial debt reduction as its lending rules require that recipients of aid have sustainable debt loans.

However the EU, whose states and institutions hold three quarters of the Greek debt which totalled 312.7 billion euros at the end of March, is reluctant to consider this politically sensitive question.

The Greek government doesn't fail to remind the EU that in 2012 it held out the possibility of some debt relief.

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today greece default an unscripted tragedy that may end with euro ending Arab Today, arab today greece default an unscripted tragedy that may end with euro ending

 



Arab Today, arab today
Arab Today, arab today Fadi explains secrets of  Nancy Ajram's newlook

GMT 18:23 2017 Friday ,24 February

Fadi explains secrets of  Nancy Ajram's newlook
Arab Today, arab today Messi visit will contribute in tourism

GMT 14:04 2017 Friday ,24 February

Messi visit will contribute in tourism
Arab Today, arab today Expresses Algerian history by woody figures

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures
Arab Today, arab today Iran complying with nuclear deal

GMT 07:14 2017 Saturday ,25 February

Iran complying with nuclear deal
Arab Today, arab today Zainab al-Maliki reveals herTV presenter models

GMT 18:12 2017 Friday ,24 February

Zainab al-Maliki reveals herTV presenter models
View News in Arabic - Business: اقتصاد دولي
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Reading therapy relieves mental disorders

GMT 15:39 2017 Friday ,24 February

Reading therapy relieves mental disorders
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Penguins in the age of dinos

GMT 11:44 2017 Saturday ,25 February

Penguins in the age of dinos
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today 'Constructive' Vauxhall talk with union

GMT 08:54 2017 Saturday ,25 February

'Constructive' Vauxhall talk with union
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Actress Lobna Abdel Aziz proud of her career

GMT 06:08 2017 Thursday ,23 February

Actress Lobna Abdel Aziz proud of her career
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage

GMT 07:36 2017 Wednesday ,22 February

Wafaa Amer is happy for Sherihan’s return

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 22:42 2017 Thursday ,23 February

Nasima Gamei revives heritage in jewelries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 20:33 2017 Friday ,17 February

To release new antiques collection

GMT 10:20 2017 Thursday ,23 February

Brazil's top diplomat resigns

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday